Industrial policy for renewable energy: The innovation impact of European policy instruments and their interactions

Abstract

This paper examines the impact of renewable energy policies as well as three renewable energy policy instruments (demand pull, technology push and systemic) and their interactions on renewable energy innovation in 15 European Union member states for the period 1995–2014. We first develop a conceptual framework and hypotheses, and then we test these by employing a unique and comprehensive data set. We find that renewable energy policies as a whole as well as demand pull and technology-push instruments affect renewable energy innovation positively and significantly. The impact of interactions between instruments on renewable energy innovation is also positive and significant, but that of specific pairs of instrument interaction is contingent on the specification used. We discuss reasons for these findings, implications for public policy, as well as limitations and opportunities for further research.